In a recent order in favor of ITC Limited (“ITC”), the Delhi High Court (“Court”) upheld an injunction restraining Arpita Agro Products Pvt. Ltd. (“AAPPL”) and its associates from using the trademark “POWRNYM” for their floor cleaning products. The earlier single-bench decision (“Impugned Order”) was based on ITC’s allegations of trademark infringement and passing off.
For a detailed analysis of the Impugned Order that granted the injunction in favor of ITC, please refer to a previous blog post accessible at: ITC obtains injunction against former owners of NIMYLE and JOR-POWR Trademarks.
Background
In 2023, a dispute arose between ITC and AAPPL concerning the use of the mark “POWRNYM.” ITC, a leading FMCG company, had acquired exclusive rights over the trademarks “NIMYLE” and “JOR-POWR” from AAPPL in 2018. The agreements also involved the transfer of associated intellectual property, including copyright over label designs and derivative marks.
Facts of the Case
The key facts relevant to AAPPL’s appeal are as follows:
- AAPPL’s Past Use: AAPPL manufactured and sold products under the mark “NIMYLE” and other “NIM” family trademarks from 1996 to 2018.
- ITC’s Acquisition: In 2018, ITC acquired intellectual property rights to “JOR-POWR,” “NIMYLE,” the “NIM” family of marks, labels, and others from AAPPL through an Asset Purchase Agreement and a Brand Assignment Agreement for ₹100 crores.
- Non-Compete Agreement: AAPPL was restricted from entering the floor cleaning segment for four years.
- Launch of ‘POWRNYM’: In 2023, after the non-compete period ended, AAPPL introduced “POWRNYM” floor cleaners.
- ITC’s Legal Action: ITC filed a suit seeking an injunction against AAPPL, alleging that:
- The “POWRNYM” mark was deceptively similar to “NIMYLE” and “JOR-POWR.”
- AAPPL’s product packaging closely resembled ITC’s trade dress.
- The adoption of “POWRNYM” was in bad faith to capitalize on ITC’s goodwill.
- Court’s Interim Injunction: ITC obtained an ex-parte interim injunction from the single-judge bench of the Delhi High Court, restraining AAPPL from using “POWRNYM.”
Issues Before the Division Bench
The key issues considered by the Division Bench in light of AAPPL and ITC’s arguments were:
- Grounds for Interference with the Impugned Order: Did AAPPL establish a case for setting aside the injunction?
- Trademark Infringement and Passing Off:
- Was “POWRNYM” deceptively similar to ITC’s “NIMYLE” and “JOR-POWR” brands?
- Could AAPPL claim independent rights over “POWRNYM” despite the previous trademark assignment?
- AAPPL had contractually agreed not to use any trademarks confusingly similar to the assigned marks. Did AAPPL’s launch of “POWRNYM” violate the non-compete and non-derivative clauses of the 2018 agreements?
- Did AAPPL’s packaging, bottle shape, and trade dress closely resemble ITC’s “NIMYLE,” misleading consumers and leveraging ITC’s goodwill?
- Delay in Filing Suit and Non-Use Argument:
- AAPPL argued that ITC delayed filing the suit since “POWRNYM” was advertised in 2021, yet ITC only took action in 2023. Could this delay weaken ITC’s infringement claim?
- AAPPL also contended that ITC was not actively using “JOR-POWR.” Could ITC still claim exclusive rights over “POWR”?
Court’s Analysis
1. Trademark Infringement
- The Court observed that AAPPL derived “POWR” from “JOR-POWR” and “NYM” from “NIMYLE,” forming a composite mark likely to mislead consumers.
- It rejected AAPPL’s defense that “POWRNYM” was an independent word, ruling that its adoption was not coincidental.
- The Court emphasized that AAPPL had not only assigned the trademarks to ITC but was also contractually bound to refrain from using similar marks.
2. Passing Off
Applying the “trinity test” for passing off—goodwill, misrepresentation, and damage—the Court held that:
- ITC had established substantial goodwill in the “NIMYLE” brand.
- AAPPL’s use of “POWRNYM” was likely to mislead consumers into believing the product was associated with ITC.
- Such confusion could harm ITC’s reputation and market share.
3. Trade Dress Similarity
- The Court found that AAPPL’s packaging was designed to resemble ITC’s “NIMYLE” product, further supporting ITC’s claim of deceptive imitation.
4. Expiry of Non-Compete Clause
- The Court ruled that the expiry of the non-compete clause did not entitle AAPPL to adopt a deceptively similar trademark.
- While AAPPL was free to compete in the floor cleaner market, it could not do so by using a mark that created consumer confusion.
5. Delay in ITC’s Legal Action
- AAPPL argued that ITC delayed filing the suit since its trademark application for “POWRNYM” was published in 2021. However, the Court ruled that ITC acted promptly upon discovering the actual use of the mark in 2023.
Court’s Decision
The Delhi High Court upheld the interim injunction passed by the single bench. The final determination of the case will be made after a full trial.
Conclusion
This order clarified that combining parts of two assigned trademarks to create a new mark can still amount to infringement. The Court emphasized that:
- Packaging and trade dress significantly impact consumer perception and can support passing-off claims.
- Non-use of a trademark does not automatically weaken the owner’s right to enforce it.
- Companies cannot circumvent trademark assignments by slightly modifying registered marks to regain market presence.
- While competition is encouraged, it must be conducted fairly without misleading consumers or capitalizing on another entity’s established goodwill.
This decision serves as a cautionary precedent for businesses engaged in trademark assignments and licensing agreements, underscoring the importance of strict compliance with contractual terms and ethical brand practices.
Citation: Arpita Agro Products Pvt. Ltd & Ors v. ITC Limited, High Court of New Delhi, FAO (OS) (COMM) 289/2024 & CM APPL. 73982/2024, pronounced on February 21, 2025, available at: https://indiankanoon.org/doc/23991065/
Authored by Kavya Sadashivan, IP Innovation, Consulting & Strategy Team, BananaIP Counsels.
Relevant Paragraphs
“24. At the outset, we will make a reference to the celebrated Judgment of the Supreme Court in Wander Ltd. v. Antox India P. Ltd., 1990 (Supp) SCC 727, wherein the Supreme Court cautioned that the Appellate Court should not interfere with the exercise of discretion by the Court of first instance, and substitute its own discretion for the same, except where such discretion has been shown to have been exercised arbitrarily, or capriciously, or perversely, or where the Court had ignored the settled principles of law regulating the grant or refusal of interlocutory injunctions. The Appellate Court should not re- assess the material and seek to reach at a conclusion different from that reached by the Court below. If the conclusion of the learned Court below was reasonably possible, based on the material before it, the Appellate Court would not be justified in interfering with the exercise of discretion only on the ground that it would have arrived at a contrary conclusion.”
“32. The appellants, therefore, are not strangers who can be attributed for lack of knowledge regarding the marks, which they had themselves assigned to the respondent for valuable consideration.
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- The test to be applied for determining the case of infringement or passing off of the trademarks of the respondent by the appellants, therefore, has to be stricter against the appellants. The appellants must stay absolutely clear of the marks, which they themselves have assigned to the respondent, and in their case, even a remote resemblance to those marks would be a sufficient ground to injunct them from using such marks. The burden of proof for establishing deceptive similarity would be lighter on the respondent, as there can be a presumption drawn against the appellants that the adoption of a mark, which even remotely takes the features of the assigned marks, was with a mala fide intent of causing deception and confusion in the minds of an unwary consumer, and to capitalize on the reputation of the marks, which they have already assigned to the respondent.”
“35. Prima facie, it appears that the appellants have only taken two prominent parts of the marks and combined them together so as to create a facade of distinction, however, maintaining the intent of causing deception, capitalize on the goodwill of the respondent, and causing dilution of the respondent‟s marks.
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- The learned counsel for the appellants has submitted that infringement in terms of Section 29 of the Trade Marks Act can arise only when the rival mark is deceptively similar to a registered mark, thereby causing consumer confusion. He submits that the said provision would not allow the comparing of a rival mark with two distinct registered marks.
- While in a given case, the said submission may have found merit, in the background of the facts of the present case, we are unable to accept the said submission. In the present case, the appellants are infringing both the registered marks, that is, „NIMYLE‟ and „JOR-POWR‟, by taking their prominent parts with the intent to deceive and cause consumer confusion.”
“44. Applying the above test to the facts of the present case and keeping in view the nature of goods, the past relationship between the parties, the resemblance of the marks, the intent of the appellants to adopt the prominent parts of the marks of the respondent, and other surrounding circumstances, in our view, no fault can be found in the findings of the learned Single Judge that a case of passing off was made out against the appellants and in favour of the respondent.”
“47. In any case, in the facts of the present case, mere delay in filing of the Suit would not have provided a ground for rejecting interim injunction in favour of the respondent, as the very adoption of the mark by the appellants was mala fide.
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- The submission of the learned counsel for the appellants, placing reliance on Clause 9.9 of the Assets Purchase Agreement dated 05.04.2018, and submitting that since the Non Compete Clause had expired by efflux of time, an order of injunction could not have been passed against the appellants, is also fallacious.”
“50. A reading of the above Clause would show that it would merely permit the appellants to manufacture and sell the ‘products that compete’ with the respondent. In the present case, the injunction against the appellants is not on the appellants manufacturing or selling competing products but from using a deceptively similar mark to that of the respondent for such products. Clause 9.9 of the Assets Purchase Agreement dated 05.04.2018, therefore, would have no application to the facts of the case. Similarly, Section 27 of the Contract Act, 1872, cannot come to the aid of the appellants.
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- On the issue of lack of territorial jurisdiction to entertain the Suit, we again do not find any infirmity in the findings of the learned Single Judge, so as to warrant any interference therewith.
- In view of the above, we do not find any merit in the present appeal. The appeal as well as the pending application is dismissed.
- We must, however, clarify that our observations hereinabove, are only prima facie in nature and should not be considered as a final opinion on the merits of the contentions raised by the parties in the Suit. The same shall have to be determined in the trial of the Suit, remaining uninfluenced by what is observed by us.”
Disclaimer
The case note/s in this blog post have been written by IP Attorneys at BananaIP Counsels based on their review and understanding of the Judgments. It may be noted that other IP attorneys and experts in the field may have different opinions about the cases or arrive at different conclusions therefrom. It is advisable to read the Judgments before making any decisions based on the case notes.
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